NAFTA Local Experts Debate the Pros and Cons of the Free-Trade Agreement

Import/Export

As of Thursday, February 1, 2018

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John Emerson, Mickey Kantor, Stephen Cheung of World Trade Center Los Angeles and Madeline Janis

Free trade between the United States, Mexico and Canada has become a hot topic lately as negotiations to revamp the North American Free Trade Agreement have been going on since last year.

The sixth round of negotiations for the trade pact—which includes Canada, Mexico and the United States—recently wrapped up in Montreal with the seventh round scheduled for late February in Mexico.

NAFTA was the subject of a panel organized by the Los Angeles County Economic Development Corp. and the World Trade Center Los Angeles for the 2018 annual Consular Corps Briefing on Jan. 29. The event at the L.A. Hotel Downtown was attended by dozens of consular executives stationed in Los Angeles as well as businesspeople and politicians.

On the panel were Mickey Kantor, the U.S. trade representative and later the U.S. Secretary of Commerce under the Clinton administration; Madeline Janis, executive director of Jobs to Move America and the former executive director for the Los Angeles Alliance for a New Economy; and John Emerson, the former U.S. ambassador to Germany for four years under the Obama administration.

Kantor brought with him the unique experience of being the U.S. Trade Representative in office when NAFTA went into effect. Even though he had a significant hand in the agreement, he believed the free-trade pact needed to be renegotiated. “God in heaven, we signed it in 1994. That was eons ago. We had only 100 websites in the world. There was no Cloud. There was no artificial intelligence. None of this was going on,” he said. “Does it need to be better enforced? Absolutely.”

There have been many opinions about whether the free-trade pact should be renewed or not, but all the panelists agreed that the global economy is not going away. For globalists, a free-trade agreement helps level the playing field among countries and establishes a set of rules that govern the environment, labor and intellectual property, among other things. However, Kantor and others believe these rules have not be enforced as well as they should have been.

“For too many years, the U.S. wanted to strengthen the economies of Germany and Japan after World War II and gave away our market to rebuild those economies for safety, security and political reasons,” Kantor said. “But those times are over.”

Janis, who advocates bringing back decent-paying jobs to America, noted that NAFTA and other free-trade agreements benefit capital movement of funds from one country or region to another but hurts many workers who find their jobs exported to another country or are faced with lower wages due to overseas competition. “This last election showed a number of things. And that was that people are in pain. The good jobs we had in the ’60s, ’70s, and ’80s have been undercut dramatically, and a part of that is the fluidity of capital. But it is also the suppression of workers to unionize and fight back.”

She told the story of workers at a Nissan car factory in Mississippi who tried to bring in a labor union, which turned out to be a pitched battle between community leaders, local residents and auto workers.

Management told the auto workers that if they voted for a union, the factory would be moving to Mexico, she said. “And guess what? They voted no,” she said. “The fear of losing the factory was so great, they voted to give away their bargaining power.”

Janis would like to see more local and state governments take their tax money and hire companies or make purchases with businesses that operate in the United States and pay a living wage. “Los Angeles and other cities in the country have used this [idea] to purchase major equipment using their government procurement policy. We have two unionized factories in the Antelope Valley making buses and railcars.”

She was referring to the Chinese company BYD, which opened a large electric-bus manufacturing plant in Lancaster and will soon grow from 750 workers to 1,200, and the Japanese company Kinkisharyo, which builds Metro railcars and employs about 400 people.

The loss of manufacturing jobs in the United States has been one of the chief criticisms of free-trade pacts. Kantor maintained that all developing countries are losing manufacturing jobs, but they are replaced with other kinds of work. “We have lost 7 million manufacturing jobs since 1980, but we have gained 33 million other jobs,” he observed.

Many on the panel pointed out that other factors have led to jobs shifts, such as technology, interest rates, wages, rules and regulations, markets and whether a nation is a consumer economy or not.

Emerson noted he had seen how energy costs have motivated big corporations to move from one continent to another. “During the time I was in Germany, BMW doubled the size of its plant in Charleston, S.C., not because of low wages, but the CEO of BMW told me he can produce a car in the United States for one-seventh the energy costs of Bavaria,” he said.

Most agreed that the auto industry in North America would be hard hit if the United States left NAFTA because so many auto parts and cars are manufactured in Mexico. “The auto industry is doing quite well, folks, and we have a number of foreign auto makers who invested in the United States,” Kantor said. “So let’s not throw out the baby with the bath water. Let’s reach some rational, productive and strong agreements where everybody benefits.”